Annual Report & Accounts 2002EuromoneyInstitutionalInvestorPLC
EuromoneyInstitutional Investor PLCContents Chairman’s Statement2 - 3Operating & Financial Review4 - 9Directors’ Report10 - 11Directors and Advisors12 - 13Corporate Governance14 - 18Report by the Board to Shareholders on Directors’ Remuneration19 - 26Independent Auditors’ Report27Group Profit & Loss Account28Group Balance Sheet29Company Balance Sheet30Group Cash Flow Statement31Notes to the Group Cash Flow Statement32Group Statement of Total Recognized Gains & Losses33Reconciliation of Movements in Shareholders’ Funds33Notes to the Accounts34 - 58Five Year Record59Internet Sites60Annual Report & Accounts 2002Page 1
Chairman’s Statement Highlights20022001changeTurnover££-12%Operating profit*££+4%Profit before tax, goodwill and exceptional items££+10%Profit before tax££+50%Adjusted diluted earnings per share*+21%=Net debt££-14%*(Before goodwill amortization and exceptional items)our company increased profits before tax, goodwill and exceptional items by 10% toY£ million in the year to September 30 in spite of a 12% drop in revenues to £ directors recommend a final dividend of , making a total for the year of , the sameas the previous diluted earnings a share increased by 21% to , helped by a lower tax dividend cover rose from times to results benefited from a series of reorganization initiatives begun during the previous year,and from strong controls on costs, against a background of some of the worst trading conditionsin the company’s history. Around two-thirds of group revenues arise from the financial sector. Itsfinancial publishing and training businesses were hit by cost cuts at global investment banks andby the drop in the number of delegates travelling to attend training courses following September revenues fell by 11% across the group, and advertising in the financial titles fell by afifth. The US was particularly affected, with advertising in Institutional Investor falling by 30%,against a fall of 22% at company’s priority during the year was to remain as profitable as possible and to continue toposition the group for future growth. In spite of cutbacks by some financial institutions, ISI, theemerging markets information service, which is subscription-based, continued to gain clients,particularly in the public sector, and increased its revenues by 8% during the year. It made its firstmonthly profit in September, and its cash flow was positive from January further encouraging sign for the group was a drop in debt of £ million, helped by a weaker dollar,to £ million at year-end, increasing the capacity of the company to make further revenues fell a fifth to £ million. In sharp contrast, advertising into business titlesincreased by 2% to £27 million, helped by the full year inclusion of Gulf Publishing acquired inAugust 2001. The group’s continued focus on subscription products, such as ISI, is highlighted bythe fact that subscription revenues (excluding titles closed at the beginning of the year) fell byjust 1%. Event sponsorship was the strongest revenue stream, increasing 5% to £ rigorous cost reduction programme was implemented during the first half, following the closureof certain loss-making businesses at the end of last year, the restructuring of under performingbusinesses and the elimination of loss-making and low margin products. These actionscontributed savings of £ million. Headcount was reduced from 1,684 at the beginning of theyear to 1,358 at the end of September, giving rise to one-off costs of nearly £1 million. Most ofthis reduction in headcount was completed during the first half. Space commitments were cut andother costs were reduced through renegotiations with profits before goodwill increased £1 million to £ million. The operating marginimproved from % to %. Profits from financial publishing fell from £ million to£ million, but even in these tough conditions, titles such as Euroweek, Global InvestorandProject Financemanaged to increase their publishing, which mainly covers the legal, energy, pharmaceutical and travel sectors,performed relatively well, with profits increasing by 6% to £ million. Both Legal Publishingand Engel Publishing, the pharmaceutical publishing business, increased second half profits aftera difficult start to the year. Gulf Publishing contributed a profit of £200,000 after a first half Business Traveller group of titles recovered well from the impact of September 11 and alsoincreased 2Annual Report & Accounts 2002
EuromoneyInstitutional Investor PLCChairman’s Statement continuedTraining businesses are particularly sensitive to delegate numbers. Travel concerns, budget cutsand headcount reductions badly affected course numbers at the financial and audit and IT securitytraining businesses. As a result, training profits fell £ million to £ and seminars was the best performing part of the group. Profits increased£ million to £ million, most of the improvement coming in the first half when the group runsfour of its five largest events including Vinisud, the biennial wine exhibition in France. Many ofthe group’s conferences rely on sponsorship fees rather than paying delegates. Sponsorship provedto be a robust revenue stream, reflecting in part the quality of large annual repeat events such asthe Euromoney Bond Investors Congress, the Euromoney Global Borrowers & Investors Forumandthe Coaltransannual coal conference, although financial conference sponsorship revenues nowshow signs of weakness. In the past couple of years the company has invested in two new eventstreams, business meetings and awards dinners, and both of these achieved strong revenue and information services contributed a profit of £ million against a loss of£ million. Most of the improvement came from ISI, which reduced its losses by £ million,but Capital Data and Capital Net also did well. The performance at ISI in the second half was muchstronger than in the first. Government agencies and corporates have been the main source ofgrowth, and financial customers now only account for 43% of revenues. The cost base of ISI isrelatively fixed and the infrastructure is in place to develop new revenue profit before tax increased from £ million to £ million after lower financingcharges and exceptional profits of £ million following the first half receipt of the final proceedsfrom the sale of the 100% Design exhibition in 1999. The previous year’s results included anexceptional charge of £ million to cover the cost of closing three loss-making was an exceptional tax credit of £ million, which arose from the release of prior year taxprovisions for items now agreed with the relevant tax authorities. The full year effective tax rate,before goodwill and exceptional items, is 16% against 22% in 2001, partly as a result of the fulladoption in the year of FRS 19 ‘Deferred Taxation’.During the year the group received £ million from the final tranche of proceeds from the saleof 100% Design. In November 2001 the group spent £300,000 acquiring the assets of TempestConsulting and further investments were made in ISI. A start-up loan of £400,000 to the associateentity, Capital Net, was repaid from the cash flows from the successful database products it haslaunched. Net financing costs fell by £ million to £ million due to a combination of lowerinterest rates, favourable exchange rates, and strong cash flows. Capital expenditure includedfitting out costs of £ million for Institutional Investor, which moved to new offices in recession in financial markets has continued into the current year, particularly in the US, andgroup profits are likely to be lower in the first quarter. Revenues in some businesses, includingEuromoney,show some signs of recovery. The first half should continue to benefit from last year’sreorganization and cost group believes that it will emerge strongly when the financial cycle begins an upswing and,as a result, plans to increase spending on subscription marketing. It continues to focus on newbusiness investment and to seek acquisitions, particularly in business were delighted to welcome Michael Carroll, Editor of InstitutionalInvestor, to the board of the company in people did very well to achieve such a good result in very toughconditions. I thank them, on your behalf and mine, for theircommitment, and I am confident they will do everything they can toproduce the best results from the best FallonChairmanNovember 20 2002Annual Report & Accounts 2002Page 3
Operating & Financial ReviewOperating and financial reviewThe downturn in world financial markets, and in global economies in general, meant tradingconditions in 2002 were exceptionally difficult. Full year revenues were down £ million on2001. This includes an £ million decline in advertising revenues and a £ million reductionin training and event revenues (which benefited from the biennial Vinisudwine convention), withthe remaining decline coming from subscriptions, offset by a £ million increase in sponsorshiprevenues. A principal driver of the revenue declines was the spending and headcount reductionsacross the global investment banks. In addition, training courses were further hit by a reducedwillingness to travel following the September 11 terrorist attacks in the United compensate for the fall in revenues the group embarked on an extensive cost reductionprogramme at the beginning of the year. The sale or closure in 2001 of Semaphore, Influent andInvestor Access, as well as a number of other magazines and internet businesses this year, resultedin savings of £ million. Permanent headcount at September 30 2002 was 1,358, a fall of nearly20% since September 2001. There were also significant cost savings on print, paper, facility andevent costs, space and ISI, the first profitable trading month was achieved in September. The loss for the year was£ million against £ million in 2001. Revenues grew by 8% over the prior year in difficulttrading conditions. The previous restructuring of the business and headcount reduction haveachieved a significant reduction in the cost base. Results have benefited from a large increase inthe depth of the service: some 6,000 data providers are carried compared with 1,800 when thebusiness was acquired in 1999. StrategyIn 2001 the group set out its strategy for growing profits to a target level of £50 first part of this strategy focused on restoring operating margins to the levels achieved beforethe significant investment in ISI and after other new media businesses. Actions taken toPage 4Annual Report & Accounts 2002
EuromoneyInstitutional Investor PLCOperating & Financial Review continuedimplement this part of the strategy have included the closure of loss-making businesses, therestructuring of under-performing businesses, the elimination of low-margin products andimprovements in management quality. These actions are largely complete and the additional focusin 2002 on reducing the costs base means the group is well positioned to benefit from increasesin revenues and margins once markets rest of the strategy concentrates on growing the business, both organically and throughacquisitions, particularly in non-financial and disposalsIn November 2001, the company acquired some of the trade and assets of Tempest significantly expands Institutional Investor’s position as the pre-eminent source of marketresearch based rankings of sell side analysts as well as increasing the research offering. It alsohelped Institutional Investor run its first All-America Research Team awards dinner in November2002, an event which attracted significant press coverage following the speech by Eliot Spitzer,the New York Attorney Investor completed a reorganisation of its newsletter and journal portfolio. Thisresulted in the closure of three titles and the sale of a further five. Institutional Investor nowpublishes 30 newsletters and journals with further launches in the pipeline. The company continues to pursue acquisition opportunities consistent with its strategy ofincreasing its critical mass in sectors characterised by global markets, a demand for high qualityinformation, and high levels of capital investment and marketing. The flow of potentialtransactions has been as high as ever but closing transactions has been more difficult because vendor price expectations generally fail to reflect market conditions. In 2003 there willbe an increased focus on acquisitions in non-financial sectors, particularly energy Report & Accounts 2002Page 5
Operating & Financial Review continuedNew business investmentNew business spend during 2002 was sharply down on 2001. This was largely the result of thereduced investment in new media businesses following the strategic decision in 2001 to focus onlyon internet businesses that had a clear path to a sustainable profit, with the emphasis onsubscription-driven revenues rather than advertising. As a result, both the II Searches andPharmalive database businesses are now profitable and growing. Meanwhile investment in more traditional products has continued, albeit at a lower level thanusual because of the exceptionally difficult market conditions. Products launched during the yearinclude training courses for the pharmaceutical sector, awards dinners and conferences in theenergy sector (through the recently acquired Gulf Publishing), delegate-based events under theInstitutional Investor brand and local language products for the Chinese investment will continue in 2003 as the business positions itself for maximizing the returnsonce markets improve. Marketing and circulationIt has been a particularly difficult year for marketing. The company has continued to invest inbuilding subscription revenues through a combination of direct mail, telesales, and , marketing spend was down on 2001. This was partly due to the tough markets, but alsobecause direct mail was ineffective, particularly in the US, due to the extra security measures putin place after the events of September 11 and the subsequent anthrax scares. Marketing spend in2003 is expected to return to more normal levels. During the year the central marketingdepartment was reorganised to further improve its managementRisk management processes have always been firmly embedded in the group’s operating areas are the subject of regular review at board and senior management meetings and thisyear specific risks addressed have included: Page 6Annual Report & Accounts 2002
EuromoneyInstitutional Investor PLCOperating & Financial Review continued brand and reputational risk health and safety IT security and disaster recovery financial risks, particularly currency, interest and tax exposures data protection managing employment issuesThe move to new offices in New York, at a cost of more than £5 million, for InstitutionalInvestor, Internet Securities, Euromoney Training and Business Traveller, has resulted in asignificant improvement in the IT environment and physical security. An ongoing challengewill be to ensure that other parts of the business achieve the same standards. There hasalso been an increased focus on disaster recovery in light of the heightened fears overterrorist acts. DebtThe group has traditionally funded its operations using a mixture of its strong operating cashflows, retained earnings and debt. Year end debt levels were £ million lower than last year,despite a continued programme of acquisitions and new investment. Interest cover was nearlyseven times against an internal benchmark of five times, providing significant and treasuryThe group’s tax and treasury committee meets twice a year and is responsible for recommendingpolicy to the board. The committee comprises the company’s chairman, managing director, andfinance director as well as the finance director and deputy finance director of Daily Mailand General Trust plc. The group’s treasury policies are directed to giving greater certaintyof future costs and revenues through the hedging of foreign currency and interest rate risks,and ensuring that the group has both adequate liquidity for working capital and debt capacityfor Report & Accounts 2002Page 7
Operating & Financial Review continuedThe treasury function does not act as a profit centre, nor does it undertake any speculative tradingactivity. It operates within policies and procedures approved by the board and monitored by thetax and treasury rate swaps and caps are used to manage the group’s exposure to fluctuations in rates onits floating rate borrowings. The maturity profile of these derivatives is matched with the expectedfuture debt profile of the group. The group’s policy is to swap up to 80% of its term debt intofixed rates and at September 30 2002 the group had 70% of its net debt fixed through interestrates hedges. As long-term interest rates are usually higher than short-term rates this hedgingstrategy has the effect of increasing the interest charge, but it also provides significant protectionagainst the volatility in the interest rate group is exposed to foreign exchange risk in the form of transactions in foreign currenciesentered into by group companies and by the translation of the foreign currency results of overseassubsidiaries into sterling for reporting purposes. The group does not hedge the translation of theresults of foreign subsidiaries, but does endeavour to match foreign currency borrowings toinvestments in order to provide a natural hedge for the translation of the net assets of overseassubsidiaries. Approximately two-thirds of the group’s revenues are received in US dollars. Group subsidiariesdo not normally hedge transactions in foreign currencies into the functional currency of their ownoperations. However, the group has in place a series of forward currency contracts up to 12 months ahead to hedge surplus US dollar cash of the financial instruments used are set out in note 18 to the group’s tax rate has historically benefited from the tax amortization of goodwill arising onUS acquisitions. In 2002, the effective tax rate fell to % (excluding the effect of goodwillamortization and exceptional items) compared to % in 2001. This reflects a number of factorsPage 8Annual Report & Accounts 2002
EuromoneyInstitutional Investor PLCOperating & Financial Review continuedincluding the change in geographical mix of taxable profits, the adoption of FRS 19 ‘DeferredTaxation’ and the release of certain provisions in respect of prior years. In addition, the group’sUS acquisition structure was confirmed with the relevant tax authorities, resulting in the releaseof prior years’ tax provisions of £ and a reduction of approximately 3% in the effectivetax rate for 2002 and future under UK corporation tax rules all exchange gains and losses are taxable on an accrualsbasis. To hedge the cash flow effect of the tax on these exchange gains and losses, the group has entered into a forward contract selling US$14 million in exchange for sterling, maturing onMarch 27 2003. The cash flow consequence of a movement in exchange rates, which creates ataxable gain or loss, is eliminated by the cash effect of an equal gain or loss on the EnsorManaging DirectorNovember 20 2002Annual Report & Accounts 2002Page 9
Directors’ Report The directors submit their annual report and group accounts for the year ended September 30 activities and business reviewEuromoney Institutional Investor is a leading international business to business publisher, focusedprimarily on international finance. It publishes more than 100 magazines, newsletters and journalsas well as surveys, directories, books and maps. Euromoney Institutional Investor also runsconferences, seminars and training courses and is a provider of electronic business informationthrough its capital market databases and emerging markets information service. A review ofoperations and business developments is given in the operating and financial review on pages 4to results and dividendsThe group profit for the year attributable to shareholders amounted to £ million(2001: £ million). The directors recommend a final dividend of pence per ordinaryshare (2001: pence), payable on January 24 2003 to shareholders on the register onNovember 29 2002. This, together with the interim dividend of 5 pence per ordinary share(2001: 5 pence) which was declared on May 23 2002 and paid on July 2 2002, brings the totaldividend payable to pence per ordinary share (2000: pence).Directors and their interestsThe directors who served during the year are listed on page 20. Mr MJ Carroll was appointed asa director on May 23 2002. Following best practice under corporate governance and in accordancewith the company’s Articles of Association, all directors submit themselves for re-election everythree years. Accordingly, Mr PM Fallon, Mr NF Osborn, Mr CR Brown, Mr GB Strahan,Ms D Alfano and Mr CJF Sinclair, will retire at the forthcoming annual general meeting and, beingeligible, will offer themselves for re-election. Also, as required by the Articles of Association,Sir Patrick Sergeant, being over the age of 70, will retire at the forthcoming annual generalmeeting and, being eligible, will offer himself for re-election. Details of the interests of thedirectors in the ordinary shares of the company and of options held by the directors to subscribefor ordinary shares in the company are set out in the report by the board to shareholders ondirectors’ remuneration on pages 19 to shareholdingsAt November 20 2002, being the latest practical date before approval of the accounts, notificationhad been received of the following interests of 3% or more in the company’s ordinary sharecapital:Number%DMG Investment Holdings Limited62,147, Corporation group of companies3,235, Internationale à Luxembourg SA has issued international depositary receipts in bearerform in respect of a total of 1,379,000 shares (%) registered in its to purchase own sharesThe company’s authority to purchase up to 10% of its own shares expires at the conclusion of thecompany’s next annual general meeting. A resolution to renew this authority for a further periodwill be put to shareholders at this 10Annual Report & Accounts 2002
EuromoneyInstitutional Investor PLCDirectors’ Report continuedPolitical and charitable contributionsDuring the year the group made charitable contributions of £99,000 (2001: £59,000). There wereno political employeesIt is the group’s policy to give full and fair consideration to applications for employment frompeople who are disabled; to continue, wherever possible, the employment of, and to arrangeappropriate training for, employees who become disabled; and to provide opportunities for thecareer development, training and promotion of disabled involvementThe group recognizes the importance of good communication in relationships with its staff. Thisis pursued in a number of ways, including training and regular meetings between managementand staff, which seek to achieve common awareness on the part of all employees of the financialand economic circumstances affecting the group’s performance. Many employees participatedirectly in the success of the business through involvement in the group’s profit sharing schemesand in the savings related share option payment policyEach Euromoney Institutional Investor business agrees payment terms with its suppliers on anindividual basis and it is group policy to make payments in accordance with these terms. Thecompany had 55 days of purchases in creditors at September 30 2002 (2001: 59 days).AuditorsA resolution proposing the re-appointment of Deloitte & Touche will be submitted at the annualgeneral general meetingThe company’s annual general meeting will be held on January 23 order of the boardColin JonesCompany SecretaryNovember 20 2002Annual Report & Accounts 2002Page 11
Directors and Advisors Chairman‡Mr PM Fallonis an executive director and chairman, aged 56. He joined the company in 1974and was appointed an executive director in October 1975. He was appointed managing directorin 1985, chief executive in 1989 and chairman in 1992. He is chairman of the nominationscommittee. He is also an executive director of Daily Mail and General Trust plc, a non-executivedirector of Allied Irish Banks plc and a member of the board of the Trinity College DublinFoundation and the Royal Hibernian Academy Director‡Mr PR Ensoris an executive director and managing director, aged 54. He joined the company in 1976 and was appointed an executive director in 1983. He was appointed managing directorin 1992 and is a member of the nominations committee. He is also a director of Internet Securities, *†The Viscount Rothermereis a non-executive director, aged 35. He was appointed a non-executivedirector in September 1998 and is chairman of the remuneration committee. He is chairman ofDaily Mail and General Trust plc and a non-executive director of Fleming Mercantile InvestmentTrust PLC.✦*‡Sir Patrick Sergeantis a non-executive director and president, aged 78. He founded the companyin 1969 and was managing director until 1985 when he became chairman. He retired as chairmanin September 1992 when he was appointed president and non-executive director. He is a memberof the audit and nominations committees and is also a non-executive director of Daily Mail andGeneral Trust plc.*†‡Mr CJF Sinclairis a non-executive director, aged 54. He was appointed a non-executive directorin November 1985 and is a member of the remuneration and nominations committees. He is chiefexecutive of Daily Mail and General Trust plc and is a non-executive director of Reuters GroupPLC and of Schroders NF Osbornis an executive director, aged joined the company in 1983 and wasappointed an executive director in February is the publisher of DC Cohenis an executive director, aged 45. He joined the company in 1984 and wasappointed an executive director in September 1989. He is managing director of the trainingdivision. Mr CR Brownis an executive director, aged 48. He joined the company in 1982 and wasappointed an executive director in September 1989. He is director of the Specialist Publicationsdivision and president of Institutional Investor, Inc. Mr GB Strahanis an executive director, aged 57. He joined the company in 1985 and wasappointed an executive director in September 1989. He is managing director of CoaltransConferences Limited.✦*Mr JP Williamsis a non-executive director, aged 49. He was appointed a non-executive directorin June 1991 and is a member of the audit committee. He is finance director of Daily Mail andGeneral Trust plc and a non-executive director of GWR Group plc.✦*†‡Mr JC Bottsis a non-executive director, aged 61. He was appointed a non-executive director inDecember 1992 and is chairman of the audit committee and a member of the nominations andremuneration committees. He is chairman of Botts & Company Limited, a private equityinvestment firm. Previously he had a long career with Citicorp in Europe, Africa and the MiddleEast. He is a non-executive director of United Business Media plc and Amerindo Internet FundPLC. Mr CR Jonesis an executive director and finance director, aged 42. He joined the company inJuly 1996 and was appointed finance director in November 1996. He is also the companysecretary and a director of Institutional Investor, Inc. and of Internet Securities, 12Annual Report & Accounts 2002
EuromoneyInstitutional Investor PLCDirectors and Advisors continuedMr E Bounousis an executive director, aged 37. He joined the company in 1989 and was appointedan executive director in November 1996. He is director of the Euromoney Conferences group andchief executive officer of Institutional Investor’s conference division. He is also responsible for anumber of specialist magazines in the SM Bradyis an executive director, aged 37. He joined the company in 1988 and wasappointed an executive director in May 1999. He is managing director of Euromoney and is alsoa director of Capital DATA Limited and Capital NET RT Lamontis an executive director, aged 55. He joined Institutional Investor, Inc. in 1976 andwas appointed an executive director in May 1999. He is editor of Institutional Investor’s newsletterdivision and a director of Institutional Investor, Inc.†*Mr JD Bolsoveris a non-executive director, aged 55. He was appointed a non-executive director inMay 2000. He has recently retired from his position as chairman and chief executive of Baring AssetManagement Holdings Limited. He is a member of the remuneration D Alfanois an executive director, aged 46. She joined Institutional Investor, Inc. in 1984 andwas appointed an executive director in July 2000. She is managing director of InstitutionalInvestor’s conference division and a director of Institutional Investor, G Muelleris an executive director, aged 36. He joined the company in 1999 and was appointedan executive director in July 2000. He is chairman of Internet Securities, Inc. which he foundedin MJ Carrollis an executive director, aged 45. He joined Institutional Investor, Inc. in 1994 andwas appointed an executive director in May 2002. He is the editor of Institutional Investorand adirector of Institutional Investor, Inc.* non-executive director† member of the remuneration committee‡ member of the nominations committee✦member of the audit committeePresident Sir Patrick SergeantCompany Secretary CR JonesRegistered Office Nestor House, Playhouse Yard, London EC4V 5EXRegistered Number 954730Auditors Deloitte & Touche, 180 Strand, London WC2R 1BLSolicitors Nabarro Nathanson, Lacon House, Theobald’s Road, London WC1X 8RWStockbrokers UBS Warburg, 1 Finsbury Avenue, London EC2M 2PPDepositary Banque Internationale à Luxembourg SA, 69 route d’Esch, 2953 LuxembourgAgents of the DepositaryCiticorp Investment Bank (Switzerland), Bahnhofstrasse 63, PO Box 224, CH 8021 ZurichCitibank NA, Citibank House, 336 Strand, London WC2R 1HBCitibank NA, Avenue de Tervuren 249, B1150 BrusselsRegistrars Capita IRG plc, Balfour House, 390/398 High Road, Ilford, Essex IG1 1NQAnnual Report & Accounts 2002Page 13
Corporate Governance The Combined Code on corporate governance is part of the listing rules of the Financial paragraphs below and in the remuneration report on pages 19 to 26 set out how the companyhas applied the principles laid down by the Code. The company has substantially complied with theCode, save for a few exceptions disclosed in the directors’ compliance statement on page 17 and of directors who served during the year are set out on page 20. The board comprises thechairman, managing director, 11 other executive directors and six non-executive directors. Of thesix non-executive directors, two are independent whilst the remaining four are also directors ofDaily Mail and General Trust plc, an intermediate parent company. There are clear divisions ofresponsibility within the board such that no one individual has unfettered powers of is a procedure for all directors in the furtherance of their duties to take independentprofessional advice, at the company’s expense. They also have access to the advice and servicesof the company secretary. All directors submit themselves for re-election at least once every threeyears. Newly appointed directors are submitted for election at the first available opportunity aftertheir appointment. The board meets every two months and there is frequent contact betweenmeetings. Board meetings take place in London and New York, and occasionally in other locationswhere the group has operations. The meetings are held to set and monitor strategy, to reviewtrading performance, ensure adequate funding, examine major acquisition possibilities andapprove reports to shareholders. Procedures are established to ensure that appropriate informationis communicated to the board in a timely manner to enable it to fulfill its duties. A number ofstanding committees deal with specific aspects of the group’s affairs, each of which operateswithin defined terms of -executive directorsThe non-executive directors bring both independent views and the views of the company’smajor shareholders to the board. The non-executive directors, whose biographies can be foundon pages 12 and 13 of the accounts, are: The Viscount Rothermere, Sir Patrick Sergeant,CJF Sinclair, JP Williams, JC Botts and JD committeeThe executive committee comprises the executive directors and senior management. It is chairedby the company’s chairman and meets each month to discuss and determine key operational committeeThe nominations committee is responsible for proposing candidates for appointment to the boardhaving regard to the balance and structure of the board. It meets when required and comprisesthe chairman (who is also chairman of the nominations committee), managing director and threenon-executive directors; Sir Patrick Sergeant, CJF Sinclair, and JC committeeThe remuneration committee meets twice a year and additionally as required. It is responsible fordetermining the contract terms, remuneration and other benefits for executive directors, includingperformance related profit share schemes. The composition of the committee, details of directors’remuneration and interests in share options, together with information on directors‘ servicecontracts, are set out in the Report on Directors’ Remuneration on pages 19 to 14Annual Report & Accounts 2002
EuromoneyInstitutional Investor PLCCorporate Governance continuedCommunication with shareholdersThe board encourages regular dialogue with shareholders. Meetings are held, both in the US andUK, to discuss annual and interim results and highlight significant acquisitions or disposals, or atthe request of institutional shareholders. Private shareholders are encouraged to participate in theannual general meeting. All shareholders have at least twenty working days notice of the annualgeneral meeting at which directors and committee chairs are available for control and risk managementThe board is responsible for the group’s system of internal control and for reviewing itseffectiveness. Such a system is designed to manage rather than eliminate the risk of failure toachieve business objectives, and can only provide reasonable and not absolute assurance againstmaterial misstatement or accordance with the guidance published by the Internal Control Working Party of the Instituteof Chartered Accountants in England & Wales (the Turnbull Report), the board has implemented anongoing process for identifying, evaluating and managing the material risks faced by the board has reviewed the effectiveness of the group’s system of internal control and has takenaccount of material developments which have taken place since September 30 2001. It hasconsidered the major business and financial risks, the control environment and the results of theinternal auditor’s work. Steps have been taken to embed internal control and risk managementfurther into the operations of the group and to deal with areas of improvement which have cometo management’s and the board’s procedures which the directors have established with a view to providing effective internalcontrol, and which have been in place throughout the year, are as follows:The board of directors The board normally meets six times a year to consider group strategy, financial performance,acquisitions, business development and management issues; The board has overall responsibility for the group and there is a formal schedule of mattersspecifically reserved for decision by the board; Each executive director has been given responsibility for specific aspects of the group’s affairs; The board divides the group’s key risks into six broad categories and reviews and assesseseach of these at least annually; The board seeks assurance that effective control is being maintained through regular reportsfrom business group management, the audit committee and various independent monitoringfunctions; and The board approves the annual forecast after performing a review of key risk is monitored regularly by way of variances and key performance indicators toenable relevant action to be taken and forecasts are updated each quarter. The board considerslonger-term financial projections as part of its regular discussions on the group’s Report & Accounts 2002Page 15
Corporate Governance continuedQuality and integrity of personnelThe integrity and competence of personnel is ensured through high recruitment standards and acommitment to management and business skills training. High quality personnel are seen as anessential part of the control environment and the high ethical standards expected are communicatedby management leadership and through the employee handbook provided to all responsibilityThe group is aware of its social responsibility and has core procedures embedded in its internalsystems and controls to ensure that the group’s set social standards are not breached. The groupis a keen supporter of local initiatives and regularly sponsors a number of charities in the UK andthe US. Management actively recruit local graduates through the group’s graduate recruitmentprogram, providing a strong career path for successful responsibilityEuromoney Institutional Investor does not directly operate in industries where there is the potentialfor serious industrial pollution. However, it does take its environmental responsibility seriouslyand complies with all relevant environmental laws and regulations in each country in whichit operates. Wherever economically feasible, account is taken of environmental issues whenplacing contracts with its suppliers of goods and services. The group manages sensibly its and SafetyThe group is committed to the health and safety of its employees and communities in which itoperates. The group complies with all local health and safety regulations and makes use of externalhealth and safety advisors where appropriate. A health and safety audit was conducted during theyear, and the recommendations arising from this audit are being addressed. Senior management takevery seriously any information that demonstrates the group is in breach of health and appraisalThe managing director, finance director and business group managers consider proposals foracquisitions and the launch of new businesses. Proposals beyond specified limits are put to theboard for approval and are subject to due diligence by the group’s finance team and, if necessary,independent advisers. Capital expenditure is regulated by strict authorization controls. For capitalexpenditure above specified levels, detailed written proposals must be submitted to the board andreviews carried out to monitor progress against and computer systems controls and proceduresAccounting controls and procedures are regularly reviewed and communicated throughout thegroup. Particular attention is paid to authorization levels and segregation of duties. The group’stax, cash and foreign exchange positions are overseen by the tax and treasury committee, whichmeets at least twice a year. Controls and procedures over the security of data held on computersystems are periodically reviewed and are subject to internal audit. Controls include a specificfocus on data security and disaster auditThe group has an internal audit manager who draws on the services of the central finance teamto perform assignments. The responsibilities of internal audit cover four main areas; control of theassets of the business; monitoring of the accuracy of financial reporting; adherence to groupPage 16Annual Report & Accounts 2002
EuromoneyInstitutional Investor PLCCorporate Governance continuedpolicies; and the accuracy of circulation figures. Businesses and central departments are selectedfor an internal audit visit on a rotational basis and most businesses are subject to at least oneinternal audit review each year. The internal audit manager reports his findings to managementand to the audit and auditAudit committeeThe audit committee comprises three non-executive directors; JC Botts (chairman), Sir PatrickSergeant and JP Williams, and meets at least twice each financial year. The committeeis responsible for reviewing the interim report and the annual report and accounts beforetheir submission to the board and overseeing controls necessary to ensure the integrity ofthe financial information reported to the shareholders. The audit committee advises the board on the appointment of external auditors and on their remuneration, both for auditand non-audit work, with particular focus on effectiveness, independence and discusses the nature, scope and any findings of the audit with the external auditors. Thecommittee also considers and determines relevant action in respect of any control issues raisedby the external auditors, and reviews the internal audit manager’s programme and receivesperiodic reports on his reportingGoing concernAfter making enquiries, the directors are satisfied that the group has adequate resources tocontinue in operational existence for the foreseeable future. For this reason, they continueto adopt the going concern basis in preparing the of directors’ responsibilities in respect of the accountsUnited Kingdom company law requires the directors to prepare accounts for each financial yearwhich give a true and fair view of the state of affairs of the company and of the group as at theend of the financial year and of the profit or loss of the group for that period. In preparing thoseaccounts, the directors are required to: select suitable accounting policies and apply them consistently; make judgements and estimates that are reasonable and prudent; state whether applicable accounting standards have been followed, subject to any materialdepartures disclosed and explained in the accounts; and prepare the accounts on a going concern basis unless it is inappropriate to presume that thecompany will continue in directors are responsible for keeping proper accounting records which disclose with reasonableaccuracy at any time the financial position of the company and group and to enable them to ensurethat the accounts comply with the Companies Act 1985. They are also responsible for the group’ssystem of internal financial controls for safeguarding the assets of the group and hence for takingreasonable steps for the prevention and detection of fraud and other directors confirm that these requirements have been by the directors on compliance with the Combined CodeThe Listing Rules require the board to report on compliance with the 45 provisions of theCombined Code throughout the accounting year. Save for the limited exceptions outlined below,the group has complied throughout the financial year ended September 30 2002 with theprovisions set out in Section 1 of the Combined Report & Accounts 2002Page 17
Corporate Governance continuedProvision requires that non-executive directors should comprise not less than one third ofthe board. The board currently comprises 19 directors of whom six are requires that the majority of non-executive directors should be independent. Fourof the six non-executive directors are also directors of Daily Mail and General Trust plc, theintermediate parent undertaking of Euromoney Institutional Investor PLC. The board does notconsider that the relationship with Daily Mail and General Trust plc has any influence on theindependence of the non-executive directors in to provision , the board has not identified a senior non-executive director as thedirectors are of the opinion that all matters relating to the effective governance of the group mustbe dealt with by the board as a and require the remuneration and audit committees to comprise entirely ofindependent non-executive directors. The remuneration committee comprises four non-executivedirectors, two of whom are also directors of Daily Mail and General Trust plc. The audit committeecomprises three non-executive directors, two of whom are also directors of Daily Mail and GeneralTrust plc. The non-executive directors who are also directors of Daily Mail and General Trust plchave no personal financial interests in the company (other than as shareholders). Also, asexplained in the report by the board to shareholders on directors’ remuneration, JC Botts hasoptions in Internet Securities, Inc. in lieu of fees as a non-executive director of that company,which is common practice for non-executive directors in the indicates a preference for length of service contracts of directors to be not greaterthan one year. The chairman and managing director have two year rolling service contracts. Theboard considers this appropriate given the importance and commitment required for thesepositions and given the competitive pressures of the media industry. The board, however, wouldnot normally appoint a new executive director with a service contract of more than one behalf of the boardPadraic FallonChairmanNovember 20 2002Page 18Annual Report & Accounts 2002
EuromoneyInstitutional Investor PLCReport by the Board to Shareholderson Directors’ Remuneration Remuneration committeeThe remuneration committee was established in 1993. The current members are The ViscountRothermere (chairman), CJF Sinclair, JC Botts and JD Bolsover. All are non-executive directors ofthe company. The Viscount Rothermere and CJF Sinclair are directors of Daily Mail and GeneralTrust plc but have no personal financial interests in the company (other than as shareholders), andno day-to-day involvement in running the business. The committee consults the chairman andmanaging director about its proposals and is authorized to seek professional advice from outsidethe company where on directors’ remunerationThe group believes in aligning the interests of management with those of shareholders. The twoconsistent objectives in the company’s remuneration policy since its inception in 1969 have beenthe maximization of earnings per share and the creation of shareholder first objective is achieved through a comprehensive profit sharing scheme that links thepay of executive directors and key managers to the profits and growth in profits of the groupor relevant parts of the group. This scheme is completely variable with no guaranteed floorand no support the implementation of the policy of profit sharing, the group is divided into a numberof profit centres. The manager of each profit centre is paid a profit share related to the profitcentre’s profits and profit growth. Each profit centre is part of a larger business group. Eachbusiness group manager has an incentive based on the business group’s profits and profit sharing encourages directors and managers to grow their businesses, to launch newventures and to search for acquisitions that would fit well with their those on profit shares are aware that if profits rise, so does their pay. Similarly if profits fall,so do their profit shares. The profit shares of executive directors and senior managers make upmuch of their total pay. For example, of the total remuneration of the thirteen executive directorswho served in the year, % was derived from profit creation of shareholder value is also encouraged through an executive share option company’s previous scheme was approved by shareholders in 1985 and expired in 1995,although options granted under this scheme may be exercised before various dates through to2005. A new executive share option scheme was approved by shareholders in January 1996 andthe performance criteria under which options granted under this scheme may be exercised are setout on page the year share options were granted to DC Cohen, CR Jones, E Bounous, SM Bradyand G Mueller (pages 24 & 25). Options are granted in phased blocks over a period of directors believe that the profit sharing and share option arrangements are responsible formuch of the company’s success since 1969. These arrangements serve shareholders by aligningthe interests of the directors and managers with those of shareholders and are considered animportant driver of the company’s growth remuneration of the non-executive directors is determined by the Report & Accounts 2002Page 19
Report by the Board to Shareholderson Directors’ Remuneration continuedDirectors’ service contractsWith the exception of the chairman and managing director, each of the executive directors has atwelve month rolling service contract. The chairman and managing director have two year rollingservice contracts and the remuneration committee believes that the length of these contracts isappropriate given the competitive pressures of the media industry. The board, however, would notnormally appoint a new executive director with a service contract of more than one year. Noneof the non-executive directors has a service ’ remunerationYear to September 30Salary andProfitFeesBenefitsSharePensionTotalTotal200220022002200220022001££££££Executive directorsPM Fallon29,730146,2611,638,251138,8001,953,0421,758,643 PR Ensor29,730125,6611,181,217110,3001,446,9081,271,255 NF Osborn–108,997191,60616,654317,257504,373 DC Cohen–95,646106,46572,019274,130364,315CR Brown–142,955–3,276146,231379,583GB Strahan–85,02338,74536,183159,951145,563E Bounous–87,258281,0097,352375,619322,117CR Jones–218,265143,66621,090383,021280,559RT Lamont–133,36276,0292,956212,347275,260 S M Brady–105,5153,9869,071118,572274,759S Cox†––––79,780D Alfano–113,848226,6232,052342,523297,791G Mueller–110,88260,6322,111173,625154,452MJ Carroll*–51,4127,1511,29159,854–Non-executive directorsThe Viscount Rothermere29,730–––29,73029,151Sir Patrick Sergeant59,46021,63581,09574,029CJF Sinclair29,730–––29,73029,151JP Williams29,73029,73029,151JC Botts33,108–––33,10832,529JD Bolsover29,73029,73029,151270,9481,546,7203,955,380423,1556,196,2036,331,612*appointed May 23 2002†resigned March 30 2001Fees as a director include fees paid as a director of subsidiary companies. Five of the directorshave waived profit shares in respect of the current and future years as follows: PM Fallon£138,800; PR Ensor £100,000; NF Osborn £8,674; DC Cohen £65,000; GB Strahan £30,000. Profitshares waived were paid into private pension schemes on the directors’ behalf. Included within total remuneration are amounts paid into a discretionary employee 20Annual Report & Accounts 2002
EuromoneyInstitutional Investor PLCReport by the Board to Shareholderson Directors’ Remuneration continuedDirectors’ pensionsExecutive directors participate in the Harmsworth Pension Scheme (a defined benefit scheme), orthe Euromoney Pension Plan (a money purchase plan) or their own private contributionsContributions toHarmsworthEuromoneyPensionPensionPrivateSchemePlanschemesTotal££££DirectorPM Fallon––138,800138,800PR Ensor10,300–100,000110,300NF Osborn–6,47010,18416,654DC Cohen–7,01965,00072,019CR Brown–3,2763,276GB Strahan–6,18330,00036,183E Bounous–7,352–7,352CR Jones21,090–21,090RT Lamont–2,9562,956S M Brady–9,071–9,071D Alfano–2,0522,052G Mueller–2,1112,111MJ Carroll–1,2911,29131,39036,095355,670423,155Under the Harmsworth Pension Scheme, the following pension benefits were earned by thedirectors:IncreaseAccumulatedin accruedtotal accruedannual pensionTransfer valueannual pensionduring the yearof increaseat year end£££DirectorPR Ensor4,29538,87045,685CR Jones1,9296,50010,856The accrued pension entitlement is that which would be paid annually on retirement based onservice to September 30 2002 and ignores any increase for future inflation. The transfer valuesrepresent a potential liability of the company, not a sum paid or due to the individual directorand have been calculated on the basis of actuarial advice in accordance with the ActuarialNote GN11, less directors’ contributions. The normal retirement age for the Harmsworth PensionScheme is 62 Report & Accounts 2002Page 21
Report by the Board to Shareholderson Directors’ Remuneration continuedDirectors’ interests in the companyThe interests of the directors and their families in the ordinary shares of the company and itssubsidiaries as at September 30 were as follows:Ordinary shares of each20022001Beneficial interestsPM Fallon901,061901,061PR Ensor218,472218,472Sir Patrick Sergeant317,804317,804CJF Sinclair7,4947,494NF Osborn46,04046,040DC Cohen30,66430,664GB Strahan32,06832,068JP Williams1,8251,825JC Botts5,5035,503E Bounous6,9206,920CR Jones8,2808,280RT Lamont20,50320,503D Alfano1,7471,747The Viscount Rothermere17,47017,470G Mueller5,5035,5031,621,3541,621,354Non-beneficial interestsSir Patrick Sergeant–82,900Directors’ interests in subsidiariesAt September 30 2002 GB Strahan was beneficially interested in 500 ‘A’ ordinary shares ofCoaltrans Conferences Limited and G Mueller was beneficially interested in 659,999 shares ofInternet Securities, Inc. both subsidiaries of the ’ interests in Daily Mail and General Trust plcThe interests of the directors as defined under section 198 of the Companies Act 1985 in the sharesof Daily Mail and General Trust plc as at September 30 were as follows:Ordinary sharesA’ ordinary non-votingof eachshares of each2002200120022001The Viscount Rothermere11,827,63211,817,63276,821,75476,821,754PM Fallon4,0004,00036,00036,000Sir Patrick Sergeant4,0004,00090,00090,000CJF Sinclair––264,691264,691JP Williams––79,51782,017Page 22Annual Report & Accounts 2002
EuromoneyInstitutional Investor PLCReport by the Board to Shareholderson Directors’ Remuneration continuedDirectors’ interests in Daily Mail and General Trust plc continuedThe Viscount Rothermere had non-beneficial interests as a trustee at September 30 2002 in5,540,000 ‘A’ ordinary non-voting shares of each (2001: 5,540,000 shares) plus 674,208ordinary shares (2001: 674,208 shares).Daily Mail and General Trust plc has been notified that, under section 204 of the Companies Act1985 and including the interests shown in the table above, The Viscount Rothermere is deemedto have been interested in 12,556,764 ordinary shares of each (2001: 12,556,764 shares).At September 30 2002, The Viscount Rothermere was beneficially interested in 756,700 ordinaryshares of Rothermere Continuation Limited (2001: 756,700), the company’s ultimate Viscount Rothermere, CJF Sinclair and JP Williams had options over 156,000, 325,000 and237,000 ‘A’ ordinary non-voting shares in Daily Mail and General Trust plc at September 30 2002respectively (2001: 126,000, 275,000 and 207,000 respectively). The exercise price of these optionsrange from £ to £. Further details of these options are listed in the Daily Mail andGeneral Trust plc group have been no changes in directors’ interests since September 30 Report & Accounts 2002Page 23
Report by the Board to Shareholderson Directors’ Remuneration continuedDirectors’ share optionsIn addition to the beneficial interests noted above, the directors hold options to subscribe for newordinary shares of each in the company as follows:Number of optionsGrantedLapsedDateAt startduringduringAt endExercisefrom whichExpiryof yearyearyearof yearpriceexercisabledatePM Fallon346,268––346,268£ 19 0585,00085,000£ 11 09255,000––255,000£ 25 09686,268––686,268PR Ensor173,136––173,136£ 19 0575,00075,000£ 11 09225,000––225,000£ 25 092,6902,690*£ 01 02Apr 01 03475,826––475,826NF Osborn17,316––17,316£ 19 058,0008,000£ 07 052,690––2,690*£ 01 02Apr 01 0328,006––28,006DC Cohen5,888––5,888£ 19 0512,00012,000£ 07 058,000––8,000£ 02 04Mar 02 112,0522,052**£ 01 03Feb 01 04–6,000–6,000£ 23 05Jan 23 1227,9406,000–33,940CR Brown16,000––16,000£ 29 0311,04411,044£ 19 05100,000––100,000£ 08 0312,00012,000£ 07 0528,000––28,000£ 29 098,0008,000£ 02 04Mar 02 11175,044––175,044GB Strahan17,316––17,316£ 19 058,0008,000£ 07 055,000––5,000£ 02 04Mar 02 112,6902,690*£ 01 02Apr 01 0333,006––33,006Page 24Annual Report & Accounts 2002
EuromoneyInstitutional Investor PLCReport by the Board to Shareholderson Directors’ Remuneration continuedDirectors’ share options continuedNumber of optionsGrantedLapsedDateAt startduringduringAt endExercisefrom whichExpiryof yearyearyearof yearpriceexercisabledateCR Jones8,448––8,448£ 07 0731,55231,552£ 24 0412,000––12,000£ 07 0532,00032,000£ 29 0960,000––60,000£ 25 098,0008,000£ 02 04Mar 02 112,690––2,690*£ 01 02Apr 01 03–6,000–6,000£ 23 05Jan 23 12154,6906,000–160,690E Bounous8,000––8,000£ 29 038,0008,000£ 08 0440,000––40,000£ 08 038,0008,000£ 24 0424,000––24,000£ 07 0520,00020,000£ 29 098,000––8,000£ 02 04Mar 02 11–6,000–6,000£ 23 05Jan 23 12116,0006,000–122,000RT Lamont10,000––10,000£ 29 095,0005,000£ 02 04Mar 02 1115,000––15,000SM Brady3,000––3,000£ 29 0310,00010,000£ 08 048,000––8,000£ 24 0420,00020,000£ 07 0516,000––16,000£ 29 098,0008,000£ 02 04Mar 02 112,052––2,052**£ 01 03Feb 01 04–6,000–6,000£ 23 05Jan 23 1267,0526,000–73,052D Alfano10,000––10,000£ 29 098,0008,000£ 05 03Jan 05 105,000––5,000£ 02 04Mar 02 1123,000––23,000G Mueller10,000––10,000£ 02 04Mar 02 11–6,000–6,000£ 23 05Jan 23 1210,0006,000–16,000MJ Carroll4,000––4,000£ 29 098,0008,000£ 05 03Jan 05 104,000––4,000£ 02 04Mar 02 1116,000––16,000Total1,827,832 30,000–1,857,832*issued under the Euromoney Institutional Investor PLC Save As You Earn scheme 1999**issued under the Euromoney Institutional Investor PLC Save As You Earn scheme 2000No options were exercised during the Report & Accounts 2002Page 25
Report by the Board to Shareholderson Directors’ Remuneration continuedDirectors’ share options continuedThe market price of the company’s shares on September 30 2002 was £. The high and lowshare prices during the year were £ and £ respectively. The options granted in the yearwere granted on January 23 2002. The average share price over the three business days beforeJanuary 23 2002 was £. The aggregate gain made by directors on the exercise of share optionsin the year was £nil (2001: £nil).The exercise of options granted under the 1996 executive share option scheme requiressatisfaction of certain performance criteria which have been set by the remuneration the grants of options under the 1996 scheme, made on January 23 2002, the performance testset by the remuneration committee requires that the Total Shareholder Return (TSR) of thecompany exceeds that of the average TSR for the FTSE 250 index for the same period. The TSRtest is carried out at the end of each calendar month starting 30 months after the option grantdate. For the performance condition to be satisfied, the TSR of the company must exceed that ofthe FTSE 250 in any four out of six consecutive months from that addition, the following directors hold options to subscribe for common stock of US$ eachin Internet Securities, Inc. a subsidiary of the company. The options for JC Botts are exercisableat the rate of % quarterly and are fully vested after three years. The options of G Mueller areexercisable at the rate of % quarterly and are fully vested after four years. The options forNF Osborn are exercisable at the rate of 25% after one year and at a rate of % quarterlythereafter until fully vested after four startduringduringAt endExercisefrom whichExpiryof yearyearyearof yearpriceexercisabledateJC Botts6,000––6,000US$ 13 09G Mueller27,024––27,024US$ 13 0916,65316,653US$ 01 1043,677––43,677NF Osborn5,000––5,000US$ 01 10No options in Internet Securities, Inc. were exercised during the Viscount RothermereChairman of the Remuneration CommitteeNovember 20 2002Page 26Annual Report & Accounts 2002
EuromoneyInstitutional Investor PLCAuditors’ Report Independent auditors’ report to the members of Euromoney Institutional Investor PLCWe have audited the financial statements of Euromoney Institutional Investor PLC for the yearended September 30 2002 which comprise the group profit and loss account, the balance sheets,the group cash flow statement, the group statement of total recognized gains and losses, thereconciliation of movements in shareholders’ funds and the related notes 1 to 26. These financialstatements have been prepared under the accounting policies set out responsibilities of directors and auditorsAs described in the statement of directors’ responsibilities, the company’s directors are responsiblefor preparation of the financial statements in accordance with applicable United Kingdom law andaccounting standards. Our responsibility is to audit the financial statements in accordance withrelevant United Kingdom legal and regulatory requirements, auditing standards, and the ListingRules of the Financial Services report to you our opinion as to whether the financial statements give a true and fair view andare properly prepared in accordance with the Companies Act 1985. We also report if, in ouropinion, the directors’ report is not consistent with the financial statements, if the company hasnot kept proper accounting records, if we have not received all the information and explanationswe require for our audit, or if information specified by law or the Listing Rules regarding directors’remuneration and transactions with the company and other members of the group is not review whether the corporate governance statement reflects the company’s compliance withthe seven provisions of the Combined Code specified for our review by the Listing Rules and wereport if it does not. We are not required to consider whether the board’s statements on internalcontrol cover all risks and controls, or form an opinion on the effectiveness of the group’scorporate governance procedures or its risk and control procedures. We read the directors’ reportand the other information contained in the annual report for the above year as described in thecontents section and consider the implications for our report if we become aware of any apparentmisstatements or material inconsistencies with the financial of audit opinionWe conducted our audit in accordance with United Kingdom auditing standards issued by theAuditing Practices Board. An audit includes examination, on a test basis, of evidence relevant tothe amounts and disclosures in the financial statements. It also includes an assessment of thesignificant estimates and judgments made by the directors in the preparation of the financialstatements, and of whether the accounting policies are appropriate to the circumstances of thecompany and the group, consistently applied and adequately planned and performed our audit so as to obtain all the information and explanations whichwe considered necessary in order to provide us with sufficient evidence to give reasonableassurance that the financial statements are free from material misstatement, whether caused byfraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacyof the presentation of information in the financial our opinion the financial statements give a true and fair view of the state of affairs of thecompany and the group as at September 30 2002 and of the profit of the group for the year thenended and have been properly prepared in accordance with the Companies Act & ToucheChartered Accountants and Registered AuditorsLondonNovember 20 2002Annual Report & Accounts 2002Page 27
Group Profit & Loss Account for the year ended September 30 2002Note20022001£000’s£000’sTurnover2Continuing operations179,362201,442Closed businesses – continuing operations3723,341Total turnover179,734204,783Operating profit before goodwill amortization2Continuing operations28,69130,366Closed businesses – continuing operations373(2,248)29,06428,118Goodwill amortization(6,125)(5,949)Operating profit2,322,93922,169Share of operating profit in associates413169Exceptional profit/(loss) on disposal/closure of businesses41,533(3,250)Profit on ordinary activities beforeinterest and tax24,88519,088Interest receivable65891,248Interest payable and similar charges7(4,828)(6,665)Profit on ordinary activities before tax20,64613,671Tax on profit on ordinary activities(3,961)(5,025)Release of prior years’ tax provisions6,754–Total tax credit/(charge) on profit on ordinary activities82,793(5,025)Profit on ordinary activities after tax23,4398,646Equity minority interests38(217)Profit for the financial year23,4778,429Dividends paid and proposed9(12,941)(12,939)Retained profit/(loss) for the financial year10,536(4,510)Basic earnings per earnings per diluted earnings per sharebefore goodwill amortizationand exceptional per results arose from continuing 28Annual Report & Accounts 2002
EuromoneyInstitutional Investor PLCGroup Balance Sheet as at September 30 2002Note20022001£000’s£000’sFixed assetsIntangible assets1124,68531,049Tangible assets129,8936,970Investments1319547234,77338,491Current assetsDebtors1540,00749,064Cash at bank and in hand35,63330,28675,64079,350Creditors:amounts falling due within one year16(55,612)(67,581)Net current assets20,02811,769Total assets less current liabilities54,80150,260Creditors:amounts falling due after more than one year17(98,350)(102,742)Provisions for liabilities and charges19(127)(1,169)Deferred income(31,946)(38,920)Net liabilities(75,622)(92,571)Capital and reservesCalled up share capital21219219Share premium account2233,74333,739Capital redemption reserve2288Profit and loss account22(109,775)(126,884)Equity shareholders’ deficit(75,805)(92,918)Equity minority interests183347(75,622)(92,571)The accounts were approved by the board of directors on November 20 EnsorColin JonesDirectorsAnnual Report & Accounts 2002Page 29
Company Balance Sheet as at September 30 2002Note20022001£000’s£000’sFixed assetsIntangible assets117,8828,149Tangible assets123,1163,481Investments1379,28771,66090,28583,290Current assetsDebtors1527,56838,906Cash at bank and in hand3,89426831,46239,174Creditors:amounts falling due within one year16(46,077)(57,184)Net current liabilities(14,615)(18,010)Total assets less current liabilities75,67065,280Creditors:amounts falling due after more than one year17(16,215)(13,608)Deferred income(8,298)(9,573)Net assets51,15742,099Capital and reservesCalled up share capital21219219Share premium account2233,74333,739Capital redemption reserve2288Capital reserve221,8421,842Profit and loss account2215,3456,291Equity shareholders’ funds51,15742,099Euromoney Institutional Investor PLC has taken advantage of section 230 of the Companies Act1985 and has not included its own profit and loss account in these accounts. The profit aftertaxation of Euromoney Institutional Investor PLC included in the group profit for the year is£21,995,000 (2001: £14,551,000).The accounts were approved by the board of directors on November 20 EnsorColin JonesDirectorsPage 30Annual Report & Accounts 2002
EuromoneyInstitutional Investor PLCGroup Cash Flow Statement for the year ended September 30 2002Note20022001£000’s£000’sCash inflow from continuing operating activitiesNet cash inflow before exceptional itemsA30,03333,574Outflow related to exceptional items–(438)Net cash inflow from continuing operating activities30,03333,136Returns on investments and servicing of financeInterest received5891,288Interest paid(4,769)(6,717)Dividends paid to minorities(126)(790)(4,306)(6,219)TaxationUK tax paid(3,288)(1,339)Overseas tax paid(1,090)(2,035)UK tax received571,985Overseas tax received647490(3,674)(899)Capital expenditure and financial investmentPurchase of tangible fixed assets(6,251)(2,169)Sale of tangible fixed assets162–(6,089)(2,169)Acquisitions and disposalsPurchase of unincorporated businesses(379)(420)Purchase of subsidiary undertakings–(7,503)Purchase of additional interests in subsidiary undertakings(43)(2,611)Cash acquired with subsidiary undertakings–120Proceeds on sale of subsidiary undertaking1,772–1,350(10,414)Equity dividends paid(12,941)(12,932)Cash inflow before financing4,373503FinancingIssue of new ordinary share capital4161Redemption of secured loan stock(35)–Bank loans repaid–(120)Repayment of loan by associate398–Revolving credit facilities:Increase in borrowings34,23643,069Repayment of borrowings(31,759)(42,743)Loan (repaid to)/received from DMGT group company(12,163)12,536Loan received from/(repaid to) to DMGT group company12,163(12,536)Receipts on forward hedges533433,377410Increase in cash during the yearB7,750913Annual Report & Accounts 2002Page 31
Notes to the Group Cash Flow Statement of operating profit to net cash inflow from operating activities20022001£000’s£000’sGroup operating profit22,93922,169Amortization of goodwill6,1255,949Goodwill reinstated on disposal of titles512–Depreciation of tangible fixed assets2,8273,168Loss on sale of tangible fixed assets32–Decrease in debtors9,0914,202Decrease in creditors(10,646)(293)Utilization of property rental provision(847)(1,621)Net cash inflow from continuing operating activitiesbefore exceptional items30,03333, of net cash flow to movement in net debt20022001£000’s£000’sIncrease in cash during the year7,750913Cash inflow from change in debt finance(2,442)(12,742)Decrease in net amounts due from DMGT group undertakings–12,5365,308707Other non-cash items:Currency translation differences5,075(438)Movement in net debt in the year10,383269Net debt at October 1(73,229)(73,498)Net debt at September 30(62,846)(73,229) of changes in net debtAtAtOctober 1 Cash Exchange September2001flowmovements30 2002£000’s£000’s£000’s£000’sCash at bank and in hand30,2867,148(1,801)35,633Bank overdrafts(685)6027(76)29,6017,750(1,794)35,557Debt due within one year(12,335)35801(11,499)Debt due in more than one year(102,742)(2,477)6,869(98,350)(115,077)(2,442)7,670(109,849)Amounts owed by DMGT groupundertakings12,247–(801)11,446Total net debt(73,229)5,3085,075(62,846)Page 32Annual Report & Accounts 2002
EuromoneyInstitutional Investor PLCGroup Statement of TotalRecognized Gains & Losses for the year ended September 30 2002Note20022001£000’s£000’sProfit for the financial year23,4778,429Foreign exchange translation differences226,801(806)Tax on foreign exchange translation differences22(740)179Total recognized gains and losses for the year29,5387,802Reconciliation of Movementsin Shareholders’ Funds for the year ended September 30 200220022001£000’s£000’sProfit for the financial year23,4778,429Dividends paid and proposed(12,941)(12,939)10,536(4,510)Proceeds from exercise of share options4161Reinstatement of goodwill5122,002Other recognized gains and losses relating to the year6,061(627)Net decrease/(increase) in shareholders’ deficit17,113(2,974)Opening shareholders’ deficit(92,918)(89,944)Closing shareholders’ deficit(75,805)(92,918)Annual Report & Accounts 2002Page 33
Notes to the Accounts 1Accounting policiesThe accounts have been prepared under the historical cost convention and in accordance with applicable UKaccounting standards. Set out below is a summary of the principal accounting policies adopted by the of consolidationThe consolidated accounts incorporate the accounts of the company, its subsidiary undertakings andundertakings where the group exercises dominant influence, after eliminating the effects of the group or the company owns a non-controlling interest, held for the long term, in the equity sharecapital of another company (or the equity of a partnership) and is in a position to exercise significant influenceover that company or partnership, the interest is equity accounted and the company or partnership treated as anassociated the group or the company owns a non-controlling interest in the equity share capital of another companyand is not in a position to exercise significant influence, it is held as an investment and stated in the balancesheet at results of subsidiary and associated undertakings acquired during the year are incorporated from the effectivedate of represents income from subscriptions, advertising, sponsorship and delegate fees, net of value addedtax. Subscription revenues are recognized in the profit and loss account over the period of the invoiced but relating to future periods is deferred and treated as deferred income in the balance and other financial instrumentsThe group uses various financial instruments to manage financial risk arising from fluctuations in interest ratesand foreign currency movements. These include currency swaps, forward foreign currency contracts, interest rateswaps, caps and swaps and forward foreign currency contracts are used to convert foreign currency funds into sterlingto meet sterling costs. Realized exchange gains and losses are recognized in the profit and loss premium or discount on interest rate instruments is recognized as part of net interest payable over the periodof the rate swaps, caps and collars, currency swaps and forward foreign currency contracts are not revalued tofair value or shown in the group balance sheet at the year end as all transactions derive from hedging rate swaps are accounted for on an accruals currenciesTransactions in foreign currencies are recorded at the rate of exchange ruling at the date of the transaction or,if hedged forward, at the rate of exchange of the related foreign exchange contract. Monetary assets andliabilities denominated in foreign currencies are translated into sterling at the rates ruling at the balance 34Annual Report & Accounts 2002
EuromoneyInstitutional Investor PLCNotes to the Accounts continued1Accounting policies continuedProfit and loss accounts for overseas subsidiary undertakings are converted into sterling at the average daily rateof exchange for the year, with the year end adjustment to closing rates taken to and losses arising on the retranslation of the net assets of overseas subsidiary undertakings at closing ratesare shown as a movement on reserves together with exchange differences arising on related foreign currencyborrowings used to finance the group investment in such overseas companies. Changes in the sterling value ofoutstanding foreign currency loans which finance certain fixed assets are taken to reserves together with thedifferences arising on the translation of the related foreign currency denominated assets. All other exchangedifferences are taken to the profit and loss assetsWhere the group has entered into finance leases, the obligations to the lessor are shown as part of the borrowingsand the corresponding assets are treated as fixed assets. Leases are regarded as finance leases where their termstransfer to the lessee substantially all the benefits and burdens of ownership other than the right to legal is calculated in order to write-off the amounts capitalized over the estimated useful lives of theassets by equal annual installments. Rentals payable under finance leases are apportioned between capital andinterest, the interest portion being charged to the profit and loss account and the capital portion reducing theobligations to the leases are regarded as operating leases whose rentals are charged to the profit and loss account on astraight line or other systematic rational basis as allowed by SSAP 21 ‘Accounting for Leases and Hire PurchaseContracts’.PensionsContributions to pension schemes in respect of current and past service, ex-gratia pensions, and cost of livingadjustments to existing pensions are based on the advice of are charged to the profit and loss account when amounts become payable on the accruals the defined benefit scheme there is no material difference at present between this basis and using a basis thatspreads the expected cost of providing pensions over the employees’ working lives with the group currently accounts for pensions under SSAP 24 ‘Accounting for Pension Costs’. Under FRS 17‘Retirement Benefits’, the group is required to provide additional disclosures relating to its pension schemes asset out in note per shareThe earnings per share calculations in note 10 follow the provisions of FRS 14 ‘Earnings per Share’, aftercalculating the dilution effect of the exercise of all ordinary share options granted by the company and excludingthe ordinary shares held by the Euromoney Employees’ Share Ownership Report & Accounts 2002Page 35
Notes to the Accounts continued1Accounting policies continuedDepreciationDepreciation of tangible fixed assets is provided on the straight-line basis over their expected useful lives at thefollowing rates per year:Motor vehicles20%Office equipment25% - 33%Short-term leasehold premisesover term of leaseFreehold premises2%GoodwillThe group capitalizes all goodwill arising on consolidation for those acquisitions made after October 1 goodwill is amortized to the profit and loss account over its estimated useful economic life on a straightline basis up to a maximum of 20 years. Goodwill arising on consolidation in respect of acquisitions made priorto that date remains eliminated against the profit and loss reserve, but is reinstated and charged to the profit andloss account on subsequent disposal of the business to which the goodwill the company has divisionalized the unincorporated businesses of its subsidiaries, the investment in thesubsidiary then has the substance of goodwill and is reclassified accordingly. Goodwill arising in thesecircumstances is not amortized in the company where the directors are of the view that the goodwill has anindefinite economic life, but is reviewed annually for impairment. The non-amortization of goodwill representsa departure from the Companies Act 1985 but is necessary to give a true and fair view under the provisions ofFRS 10 ‘Goodwill and Intangible Assets’. It is not possible to quantify the impact of this departure, as it woulddepend on the life adopted. As at September 30 2002 and 2001, the total of such goodwill was £7,100, taxationFollowing the issue of FRS 19 ‘Deferred Taxation’, deferred taxation is now provided in full on timing differencesthat result in an obligation at the balance sheet date to pay more tax, or a right to pay less tax, at a future date,at rates expected to apply when the timing differences crystallize based on current tax rates and law. Deferredtax is not provided on timing differences on un-remitted earnings of subsidiaries and associates where there isno commitment to remit these earnings. Deferred tax assets are only recognized to the extent that it is regardedas more likely than not that they will be an updated review of FRS 19 timing differences arising on tax deductible goodwill written off toreserves are now recognized. The company believes it appropriate to discount the resultant deferred tax liabilitiesover an indefinite period because the businesses are expected to be held for the long term. The discounting effecton short-term timing differences is not significant. The prior year effect of these changes is not 36Annual Report & Accounts 2002
EuromoneyInstitutional Investor PLCNotes to the Accounts continued2Segmental analysisUnited KingdomNorth AmericaRest of WorldTotal20022001200220012002200120022001£000’s£000’s£000’s£000’s£000’s£000’s£000’s£000’sTurnoverBy destination:Other continuing businesses32,40632,84071,55888,95275,39879,650179,362201,442Closed businesses596592722,220414623723,34132,46533,49971,83091,17275,43980,112179,734204,783United KingdomNorth AmericaRest of WorldTotal20022001200220012002200120022001£000’s£000’s£000’s£000’s£000’s£000’s£000’s£000’sTurnoverBy activity and source:Financial publishing26,11831,51440,49250,5081,5022,16368,11284,185Business publishing22,60627,20711,1936,4723,4253,76237,22437,441Training13,98216,9506,2368,5802,1942,73022,41228,260Conferences and seminars14,78613,69315,19916,6287,7938,20437,77838,525Databases and information services4,3124,2853,1562,5706,3686,17613,83613,031Closed businesses1053022673,039––3723,34181,90993,95176,54387,79721,28223,035179,734204,783United KingdomNorth AmericaRest of WorldTotal20022001200220012002200120022001£000’s£000’s£000’s£000’s£000’s£000’s£000’s£000’sOperating profitBy activity and source:Financial publishing7,86610,1965,8319,44317341313,87020,052Business publishing4,6504,9621,3791,213305(177)6,3345,998Training2,9234,1631,1371,9263896794,4496,768Conferences and seminars3,5842,9943,0872,1831,7127738,3835,950Databases and information services3,3472,924(983)(2,780)(606)(2,874)1,758(2,730)Closed businesses(11)(642)384(1,606)––373(2,248)Unallocated corporate costs(6,026)(5,622)(77)(50)––(6,103)(5,672)16,33318,97510,75810,3291,973(1,186)29,06428,118Goodwill amortization(328)(319)(5,776)(5,630)(21)–(6,125)(5,949)Operating profit after goodwillamortization16,00518,6564,9824,6991,952(1,186)22,93922,169The goodwill amortization of £6,125,000 (2001: £5,949,000) can be allocated as follows; Business publishing,£754,000 (2001: £409,000); Conferences and seminars, £190,000 (2001: £383,000); and Databases andinformation services, £5,181,000 (2001: £5,157,000).Annual Report & Accounts 2002Page 37
Notes to the Accounts continued2Segmental analysis continuedUnited KingdomNorth AmericaRest of WorldTotal20022001200220012002200120022001£000’s£000’s£000’s£000’s£000’s£000’s£000’s£000’sNet assets/(liabilities)By activity:Financial publishing1,2771,617(6,481)(13,302)(214)(322)(5,418)(12,007)Business publishing4,0933,2371,2141,203(30)(535)5,2773,905Training481662(1,936)(1,159)(308)(322)(1,763)(819)Conferences and seminars1,464205(2,039)(4,143)1,414750839(3,188)Databases and information services––(514)(507)––(514)(507)Net operating assets/(liabilities)7,3155,721(9,756)(17,908)862(429)(1,579)(12,616)Net non-operating assets/(liabilities)(48,728)(54,268)(70,867)(78,430)20,86721,694(98,728)(111,004)Goodwill5,5756,87218,72824,177382–24,68531,049(35,838)(41,675)(61,895)(72,161)22,11121,265(75,622)(92,571)Net non-operating assets/(liabilities) include principally long-term loans and loan goodwill net book value of £24,685,000 (2001: £31,049,000) can be allocated as follows; Business publishing,£13,615,000 (2001: £14,378,000); Conferences and seminars, £2,996,000 (2001: £3,188,000); Databases andinformation services, £8,074,000 (2001: £13,483,000).3Operating profitContinuingClosedContinuingClosedbusinessesbusinesses*Totalbusinessesbusinesses*Total200220022002200120012001£000’s£000’s£000’s£000’s£000’s£000’sTurnover179,362372179,734201,4423,341204,783Cost of sales(59,938)(277)(60,215)(69,401)(3,279)(72,680)Gross profit119,42495119,519132,04162132,103Distribution costs(6,505)–(6,505)(7,094)(49)(7,143)Administrative expenses(90,353)278(90,075)(100,530)(2,261)(102,791)Operating profit/(loss)22,56637322,93924,417(2,248)22,169Administrative expenses includes goodwill amortization for continuing businesses of £6,125,000(2001: £5,949,000).*Closed businesses form part of continuing 38Annual Report & Accounts 2002
EuromoneyInstitutional Investor PLCNotes to the Accounts continued3Operating profit continuedOperating profit is stated after charging:20022001£000’s£000’sGoodwill amortization6,1255,949Depreciation2,8273,168Auditors’ remuneration;Group (company £122,000 (2001: £122,000))387361Fees for non-audit services125137Property operating lease rentals5,2385,360Foreign exchange (gain)/loss(215)265The non-audit services principally relate to taxation profit/(loss) on disposal/closure of businessesIn March 1999, the group sold its investment in 100% Design Limited for a cash consideration of £743,000 anda performance based deferred consideration. During 2002, the group received the final element of the deferredconsideration amounting to £1,772, group closed its Technology + Media Limited business in the period which resulted in a goodwill write offof £239, the previous year the group closed three of its non-performing businesses resulting in an exceptionalcharge of £3,250, costs(i) Directors’ emoluments20022001£000’s£000’sThe emoluments of the directors of Euromoney Institutional Investor PLCwere as follows:Fees271266Management remuneration5,5025,646Pension contributions4234206,1966,332Details of directors’ remuneration are set out in the Report by the Board to Shareholders on Directors’ Remunerationon pages 19 to 26.(ii) Number of staff20022001AverageAverageUnited Kingdom656780North America531629Rest of World3984711,5851,880Annual Report & Accounts 2002Page 39
Notes to the Accounts continued5Staff costs continued(iii) Staff costs20022001£000’s£000’sSalaries, wages and incentives56,33162,511Social security costs4,8565,683Pension contributions1,0291,06662,21669,260(iv) Pension contributionsThe company operates the Euromoney Pension Plan in the UK and the Euromoney Institutional Investor Savings Plan in the US. It also participates in the Harmsworth Pension Scheme, which is operated byDaily Mail and General Trust pension charge for the year ended September 30 comprised:20022001£000’s£000’sHarmsworth Pension Scheme224220Euromoney Pension Plan251205Private schemes5546411,0291,066Harmsworth Pension SchemeThe Harmsworth Pension Scheme is a defined benefit scheme providing service-related benefits based on finalpensionable salary. The assets of the scheme are held independently from the company’s finances and are administeredby a Trustee company. Pension costs are assessed on the advice of an independent qualified actuary following triennialvaluations using the projected unit method. This scheme is no longer offered to new employees of the valuation of this scheme was carried out as at March 31 2001. The assumptions having the most significanteffect on the results of the valuations are shown in the following table:Price % % % % % contribution rate paid by employees is 5% of pensionable salaries and the company’s cash contribution is12% of pensionable surplus identified from the last valuation of the scheme will be amortized over a period of 11 years usingthe straight line method. The pension cost to the company of this scheme over the estimated average service lifeof employees is % of pensionable next valuation of the scheme will be carried out as at March 31 effect of UITF 6 ‘Accounting for Post-Retirement Benefits other than Pensions’ is not 40Annual Report & Accounts 2002
EuromoneyInstitutional Investor PLCNotes to the Accounts continued5Staff costs continuedFRS 17 ‘Retirement Benefits’The company is unable to identify its share of the underlying assets and liabilities in the Harmsworth PensionScheme since the scheme includes members from other companies within the Daily Mail and General Trust ratio of assets to liabilities in the Harmsworth Pension Scheme, calculated according to the requirementsof FRS 17, was 80% at the year end (2001: 102%). If calculated on this basis and reflecting current marketconditions, it is anticipated that the pension charge by the company would be around 24% of pensionable salariesfor 2003. However, an interim valuation of this scheme as at March 31 2002 on the normal funding basis indicatedonly a marginal reduction in solvency compared with a year earlier. Following this review, the actuary confirmedthat there was no particular need to adjust the company cash contribution rate of 12%. However this position willbe closely monitored going Pension PlanThe Euromoney Pension Plan is a defined contribution scheme under which contributions are paid by theemployer and assets of the plan are invested under trust with Scottish Widows in funds selected by members and are heldindependently from the company’s Pension PlansInstitutional Investor, Inc. contributes to a 401k savings and investment plan for its employees which isadministered by an independent investment provider. Employees are able to contribute up to 15% of salary withthe company matching up to 50% of the employee contributions, up to 5% of PensionsThe company provides access to a stakeholder pension plan for relevant employees who are not eligible for otherpension schemes operated by the receivable20022001£000’s£000’sInterest receivable from short-term investments5891,2487Interest payable and similar charges20022001£000’s£000’sBank overdrafts–9Revolving credit facility4,8246,654Secured loan stock424,8286,665Annual Report & Accounts 2002Page 41
Notes to the Accounts continued8Tax on profit on ordinary activities20022001£000’s£000’s(as restated)*United KingdomCorporation tax at 30% (2001: 30%)4,3204,489Associates12553Release of prior years’ tax provisions(6,754)–Over provision in respect of prior years(403)(604)(2,712)3,938Foreign taxOverseas taxation7661,104Under/(over) provision of overseas taxation in respect of prior years335(17)Total current tax (credit)/charge(1,611)5,025Deferred taxOrigination and reversal of asset timing differences(720)(22)Origination and reversal of liability timing differences2,9893,195Increase in discount(2,923)(3,173)Recognition of deferred tax assets in respect of prior years(528)–Total deferred tax (see note 20)(1,182)–Total tax (credit)/charge on profit on ordinary activities(2,793)5,025The standard rate of current tax for the year, based on the UK standard rate of corporation tax, is 30% (2001: 30%).The current tax charge for the year is different from 30% of profit before tax for the reasons set out in the followingreconciliation:20022001£000’s£000’s(as restated)*Profit on ordinary activities before tax20,64613,671Tax at 30%6,1944,101Factors affecting (credit)/charge:UK goodwill amortization1,8381,785Non-taxable items and additional deductible UK items(1,836)–US goodwill amortization(3,184)(1,250)US state taxes270524Disallowable expenditure2,590764Depreciation in excess of capital allowances2056Lower rates of tax on overseas profits(149)(531)Utilization of losses brought forward(532)(169)Overseas losses for which no relief is currently available–366Release of prior years’ tax provisions(6,754)–Over provisions in prior years(68)(621)Current tax (credit)/charge or the year(1,611)5,025*see note 42Annual Report & Accounts 2002
EuromoneyInstitutional Investor PLCNotes to the Accounts continued8Tax on profit on ordinary activities continuedIncluded within the corporation tax (credit)/charge for the year is a tax credit of £nil (2001: £121,000) in respectof exceptional items shown in the profit and loss account after operating profit (see note 4). The exceptionalitems in 2002 do not give rise to any tax charge or credit due to the availability of brought forward capital lossesand the non-deductible nature of UK goodwill amortization on share acquisitions. The tax credit in 2001 ariseson closure costs in relation to UK release of prior year tax provisions of £6,754,000 relates to tax provisions no longer required followingagreement of certain open issues with the relevant tax authorities in relation to the group’s US £000’s£000’sInterim paid 5p per share (2001: 5p)4,3904,388Final proposed per share (2001: )8,5608,56012,95012,948Employees’ Share Ownership Trust dividend(9)(9)12,94112,93910Earnings per share20022001£000’s£000’sBasic earnings23,4778,429Goodwill amortization6,1255,949Exceptional (profit)/loss on disposal/closure of businesses (note 4)(1,533)3,250Release of prior years’ tax provisions (note 8)(6,754)–Adjusted earnings before goodwill amortization and exceptional items21,31517,628NumberNumber000’s000’sWeighted average number of shares87,79387,757Shares held by the Employees’ Share Ownership Trust(59)(59)87,73487,698Effect of dilutive share options14Diluted weighted average number of shares87,73587,702Annual Report & Accounts 2002Page 43
Notes to the Accounts continued10Earnings per share continuedPence perPence pershareshareBasic earnings per of dilutive share options––Diluted earnings per of goodwill of (profit)/loss on disposal/closure of businesses() of prior years’ tax provision releases()–Adjusted diluted earnings per share before goodwill amortization andexceptional adjusted diluted earnings per share figure has been disclosed since the directors consider it to give a moremeaningful indication of the underlying trading fixed assetsGroupCompanygoodwillgoodwill£000’s£000’sCostAt October 1 200145,9448,149Additions339–Disposals(283)–Fair value adjustments(302)(226)At September 30 200245,6987,923AmortizationAt October 1 200114,895–Charge for the year6,12541Disposals(7)–At September 30 200221,01341Net book value at September 30 200224,6857,882Net book value at September 30 200131,0498,149Included in the goodwill amortization charge for the year is £5,140,000 (2001: £5,140,000) in respect of InternetSecurities, Inc. whose goodwill is amortized over five years. All other goodwill is amortized over 20 44Annual Report & Accounts 2002
EuromoneyInstitutional Investor PLCNotes to the Accounts continued12Tangible fixed assetsShort-termMotorOfficeleaseholdFreeholdvehiclesequipmentpremisespremisesTotal£000’s£000’s£000’s£000’s£000’sGroupCostAt October 1 200143114,1167,34586222,754Additions772,0034,182–6,262Disposals(176)(2,955)(3,373)–(6,504)Transfers44(49)5–Foreign exchange1(528)(299)–(826)At September 30 200237712,5877,86086221,686DepreciationAt October 1 200121310,8024,62114815,784Charge for the year832,181546172,827Disposals(141)(2,856)(3,303)–(6,300)Transfers29(25)(4)–Foreign exchange–(479)(39)–(518)At September 30 20021849,6231,82116511,793Net book value at September 30 20021932,9646,0396979,893Net book value at October 1 20012183,3142,7247146,970Short-termMotorOfficeleaseholdFreeholdvehiclesequipmentpremisespremisesTotal£000’s£000’s£000’s£000’s£000’sCompanyCostAt October 1 20013704,0052,9978628,234Additions23373––396Disposals(83)(42)(125)At September 30 20023104,3362,9978628,505DepreciationAt October 1 20011883,1771,2401484,753Charge for the year6352612717733Disposals(75)(22)––(97)At September 30 20021763,6811,3671655,389Net book value at September 30 20021346551,6306973,116Net book value at October 1 20011828281,7577143,481Annual Report & Accounts 2002Page 45
Notes to the Accounts continued13Fixed asset investmentsESOTInvestments inLoans toProvisions forinvestmentassociatedassociatedliabilities andin ownTradeundertakingsundertakingschargessharesinvestmentTotal£000’s£000’s£000’s£000’s£000’s£000’sGroupAt October 1 2001(180)3981667414472Share of retained profits 287––––287Repayment of loan–(398)(398)Utilization of provision–(166)––(166)At September 30 2002107–7414195ESOTInvestmentsinvestmentin associatedin ownTradeSubsidiariesundertakingssharesinvestmentTotal£000’s£000’s£000’s£000’s£000’sCompanyAt October 1 200171,53834741471,660Additions10,076–––10,076Disposals(513)(513)Foreign exchange(1,936)–––(1,936)At September 30 200279,16534741479,287The principal associated undertaking at September 30 2002 was Capital NET Limited whose principal activity isthe provision of electronic database services. The group has a % interest in Capital NET group has a 50% interest in Capital DATA Limited which is accounted for as a trade investment as the groupdoes not exercise significant influence nor is it involved in the day to day running of the business. The group isentitled to % of Capital Data’s revenues which amounted to £2,437,000 in the year (2001: £2,266,000).The investment in own shares is held by the Euromoney Employees’ Share Ownership Trust (ESOT). At30 September 2002 the ESOT held 58,976 shares carried at a historic cost of £ per share with a market valueof £120,000 (2001: 58,976 shares with a market value of £126,000). Interest and administrative costs are chargedto the profit and loss account of the ESOT as 46Annual Report & Accounts 2002
EuromoneyInstitutional Investor PLCNotes to the Accounts continued13Fixed asset investments continuedDetails of the principal subsidiary undertakings included in these consolidated financial statements at September 302002 are as follows:Principal activityCountryDirect investmentsProportion heldand operationof incorporationAdhesion (UK) Limited100%ConventionsEnglandBusiness Traveller (Holdings) Limited95%*Holding companyEnglandCoaltrans Conferences Limited95%ConferencesEnglandEuromoney Publications (Jersey) Limited100%†PublishingJerseyEuromoney Publications (Overseas) Limited100%Holding companyEnglandEuromoney US Holdings LP100%Holding companyUSGlenprint Limited100%PublishingEnglandMondiale Corporation Limited100%PublishingEnglandThe Petroleum Economist Limited100%PublishingEnglandTipall Limited100%Property holdingEnglandWorld Link Publications Limited50%#PublishingEnglandAll holdings are of ordinary shares.*The company also owns 100% of the preference shares of Business Traveller (Holdings) Limited. Subsequent tothe year end the company purchased the remaining 5% of its ordinary share capital.†Euromoney Publications (Jersey) Limited’s principal country of operation is Hong Kong.#World Link Publications Limited is treated as a subsidiary undertaking and fully consolidated in the group’sresults because the group is in a position to exercise dominant influence over its operating and activityCountryIndirect investmentsProportion heldand operationof incorporationAdhesion et Associes SA100%ConventionsFranceBusiness Conventions Internationale100%ConventionsFranceCarlcroft Limited100%PublishingEnglandEII Holdings, %*Holding companyUSEngel Publishing Partners90%PublishingUSEuromoney, %Holding companyUSEuromoney Training, %Holding companyUSEuromoney (Singapore) Pte %TrainingSingaporeGulf Publishing Company100%PublishingUSInstitutional Investor, %PublishingUSInternet Securities, %Information servicesUSLatin American Financial Publications, %PublishingUSMed Ad, %Holding companyUSMIS Training Institute, %TrainingUSMIS Training (UK) Limited100%TrainingEnglandPerry Publications Limited95%PublishingEnglandPerry Publications, %PublishingUSAll holdings are of ordinary shares.*The company also owns 100% of the preference shares of EII Holdings, Report & Accounts 2002Page 47
Notes to the Accounts continued14AcquisitionsThe following interests in subsidiaries were acquired in the year, all of which were accounted for using theacquisition in equity shareholdingsOn October 1 2000, the group increased its equity shareholding in World Link Publications Limited from 46% to50% for a cash consideration of £152,000, of which £109,000 was paid in January 2001 and £43,000 was paidin May of new businessesOn November 2 2001, the group purchased some of the assets and trade of Tempest Consultants Limited for acash consideration of £339,000 resulting in goodwill of the same May 23 2001, the group purchased the business and assets of The Company Investor Showand The TechnologyInvestor Showfrom Imperator Financial Conferences and Exhibitions for a cash consideration of £822,000, ofwhich £782,000 was paid by September 30 2001 and £40,000 was paid in March 2002, resulting in goodwill ofthe same £000’s£000’s£000’s£000’sAmounts falling due within one yearTrade debtors23,11731,60210,86716,571Amounts owed by DMGT group undertakings (note 25)11,85212,247––Amounts owed by subsidiary undertakings––12,32620,251Other debtors1,1182,1772,2451,268Deferred tax (note 20)1,182–1,182–Prepayments and accrued income2,7383,03894881640,00749,06427,56838,90616Creditors: amounts falling due within one yearGroupGroupCompanyCompany2002200120022001£000’s£000’s£000’s£000’sBank overdrafts76685–731Redeemable secured loan stock53885368Trade creditors2,6957,3971,1325,082Amounts owed to DMGT group undertakings (note 25)14,13014,73714,10214,737Amounts owed to subsidiary undertakings––6,5066,885Other creditors7,0916,3194,5394,396Corporation tax5,75510,5641,2536,201Accruals17,25818,8229,93810,530Deferred consideration for acquisitions–415––Proposed dividend8,5548,5548,5548,55455,61267,58146,07757,184Page 48Annual Report & Accounts 2002
EuromoneyInstitutional Investor PLCNotes to the Accounts continued17Creditors: amounts falling due after more than one yearGroupGroupCompanyCompany2002200120022001£000’s£000’s£000’s£000’sRevolving credit facilities (note 18)98,350102,74216,21513,60818TreasuryOverviewAn overview of treasury policies is included within the operating and financial review on pages 4 to 9. Short-termdebtors and creditors and inter-company balances have been excluded from the following disclosures other thanthe currency profile of monetary assets and liabilities20022001£000’s£000’sBank overdraft76685Amounts owed to DMGT group undertakings11,85212,247Redeemable secured loan stock5388Revolving credit facility98,350102,742110,331115,762Financial assets20022001£000’s£000’sCash at bank35,63330,286Amounts owed by DMGT group undertakings11,85212,24747,48542,533Redeemable secured loan stockThe redeemable secured loan stock can be redeemed at par at the holder’s option at six months notice. Interestis payable at 1% below credit facilityThe group is one of a number of approved borrowers under a £ million Daily Mail and General Trust plcmulti-currency committed revolving credit facility. Interest is payable on the facility at a rate of % aboveUS dollar LIBOR. As at 30 September 2002 there were no other uncommitted un-drawn facilities directlyavailable to the group. No commitment or arrangement fees are paid to the banks in respect of the revolvingcredit facilities, but a fee is included within the % margin which is paid by the group to the Daily Mail andGeneral Trust plc. The facility expires on September Report & Accounts 2002Page 49
Notes to the Accounts continued18Treasury continuedMaturity profile of financial liabilitiesThe maturity profile of the group’s financial liabilities as at September 30 2002 was as follows:Owed toDMGTLoanBankgroupRevolvingstockoverdraftundertakingscreditTotal£000’s£000’s£000’s£000’s£000’sAmounts falling due:Within one year537611,852–11,981Between one and two years––––Between two and five years–98,35098,350Gross financial liabilities537611,85298,350110,331The maturity profile of the company’s financial liabilities as at September 30 2001 was as follows:Owed toDMGTLoanBankgroupRevolvingstockoverdraftundertakingscreditTotal£000’s£000’s£000’s£000’s£000’sAmounts falling due:Within one year8868512,247–13,020Between one and two years––––Between two and five years102,742102,742Gross financial liabilities8868512,247102,742115,762Currency and interest rate profile of financial liabilitiesThe profile of financial liabilities stated after taking account of various interest rate swaps as at September 30was as follows:CurrencyUS dollarsSterlingTotalUS dollarsSterlingTotal200220022002200120012001£000’s£000’s£000’s£000’s£000’s£000’sFloating rate59,3649659,46061,2418861,329Fixed rate50,871–50,87154,433–54,433110,23596110,331115,67488115,762Page 50Annual Report & Accounts 2002
EuromoneyInstitutional Investor PLCNotes to the Accounts continued18Treasury continuedOf the fixed rate liabilities:20022001Weighted average interest %%Weighted average period for which the rate is yearsCurrency and interest profile of financial assetsThe interest rate risk profile of the group’s financial assets at September 30 2002 was as follows:US dollarsSterlingOthersTotal£000’s£000’s£000’s£000’sFloating rateCash at bank24,4556,4572,56533,477Amounts owed by DMGT group undertakings11,852––11,85236,3076,4572,56545,329Non-interest bearing1,7331522712,15638,0406,6092,83647,485Currency and interest profile of financial assetsThe interest rate risk profile of the group’s financial assets at September 30 2001 was as follows:US dollarsSterlingOthersTotal£000’s£000’s£000’s£000’sFloating rateCash at bank23,7841,29074825,822Amounts owed by DMGT group undertakings12,247––12,24736,0311,29074838,069Non-interest bearing3,150–1,3144,46439,1811,2902,06242,533Currency profile of net monetary assetsThe table below shows the group’s currency profile which gives rise to net currency gains and losses recognizedin the profit and loss account. These comprise the monetary assets and liabilities of the group which are notdenominated in the operating currency of the operating unit involved, but exclude certain non-sterling borrowingswhich are matched by equivalent group assets or are treated as hedges of net investments in overseas amounts shown take into account the effect of currency swaps, forward contracts and other derivatives enteredinto to manage these Report & Accounts 2002Page 51
Notes to the Accounts continued18Treasury continuedAs at September 30 2002 these exposures were as follows:Net foreign currency monetary assets/(liabilities)SterlingUS dollarsOtherTotal£000’s£000’s£000’s£000’sFunctional currency:Sterling–6,1651,0707,235US Dollar167––167Other(70)8367773Total977,0011,0778,175As at September 30 2001 these exposures were as follows:Net foreign currency monetary assetsSterlingUS dollarsOtherTotal£000’s£000’s£000’s£000’sFunctional currency:Sterling–10,4571,02011,477US Dollar72––72Other–7644221,186Total7211,2211,44212,735Fair values of financial assets and liabilitiesSet out below is a comparison of book values to fair values of all the group’s financial assets and liabilities asat September 30 2002. Market values have been used to determine the fair value of all swaps, caps and foreigncurrency valueFair valuePrimary financial instruments held to finance the group’s operations:£000’s£000’sLiabilities:Short-term borrowings and current portion of long-term borrowings(11,981)(11,981)Long-term borrowings(98,350)(98,350)(110,331)(110,331)Assets:Amounts owed by DMGT group undertakings11,85211,852Cash at bank35,63335,63347,48547,485Derivative financial instruments held to manage the interest rate andcurrency profile of the group:Interest rate swaps–(3,051)Derivative financial instruments held or issued to hedge the currencyexposures on expected future sales:Forward foreign currency contracts–1,830Page 52Annual Report & Accounts 2002
EuromoneyInstitutional Investor PLCNotes to the Accounts continued18Treasury continuedThe book values and fair values of these financial instruments as at September 30 2001 were as follows:Book valueFair valuePrimary financial instruments held to finance the group’s operations:£000’s£000’sLiabilities:Short-term borrowings and current portion of long-term borrowings(13,020)(13,020)Long-term borrowings(102,742)(102,742)(115,762)(115,762)Assets:Amounts owed by DMGT group undertakings12,24712,247Cash at bank30,28630,28642,53342,533Derivative financial instruments held to manage the interest rate andcurrency profile of the group:Interest rate swaps–(3,427)Derivative financial instruments held or issued to hedge the currencyexposures on expected future sales:Forward foreign currency contracts–865HedgesAs explained in the operating and financial review on pages 4 to 9 the group uses derivative financialinstruments to reduce exposure to foreign currency exchange risks. These instruments take the form of forwardexchange rate contracts to sell US dollars in exchange for sterling to meet the excess of sterling costs oversterling revenues as well as dividends paid to group also uses interest rate swaps and interest rate cap and collar derivatives to minimize interest September 25 2002 the group entered into a tax equalization swap to hedge the cash effect of tax onunrealized foreign currency gains and losses on the company’s net dollar liabilities. This was achieved by a saleof US$14 million in exchange for sterling maturing on March 27 the previous year the group hedged this same risk by entering into a tax equalization swap achieved by a saleof US$11 million in exchange for sterling maturing on September 27 Report & Accounts 2002Page 53
Notes to the Accounts continued18Treasury continuedUnrecognized gains and losses on hedging instruments and the movements therein are as follows:GainsLossesTotal£000’s£000’s£000’sUnrecognized gains and losses on hedges as at October 1 2001874(3,436)(2,562)Gains and losses arising in previous years and recognized in 2002(870)1,351481Gains and losses arising before October 1 2001 and not recognized in 20024(2,085)(2,081)Gains and losses arising in 2002 that were not recognized in 20021,826(966)860Unrecognized gains and losses on hedges as at September 30 20021,830(3,051)(1,221)Of which:Gains and losses expected to be recognized in the year toSeptember 30 20031,790(1,685)105Gains and losses expected to be recognized in the year toSeptember 30 2004 or later40(1,366)(1,326)19Provisions for liabilities and chargesShare of netOnerousliabilities inleaseassociatedprovisionundertakingsTotal£000’s£000’s£000’sAt October 1 20011,0031661,169Profit and loss account(847)–(847)Provided in the year200–200Exchange differences(24)–(24)Fair value adjustment on prior year acquisition(205)–(205)Elimination of share of net liabilities in associated undertakings–(166)(166)At September 30 2002127–127Maturity profile of provisions20022001£000’s£000’sWithin one year127840Between one and two years–294Between two and five years–351271,169Page 54Annual Report & Accounts 2002
EuromoneyInstitutional Investor PLCNotes to the Accounts continued20Deferred taxationThe deferred tax asset as at September 30 comprised:GroupGroupCompanyCompany2002200120022001£000’s£000’s£000’s£000’s(as restated)*(as restated)*Accelerated capital allowances448–448–Other short-term timing differences734–734–Unamortized US goodwill(88)(22)––Unutilized tax losses from US goodwill8822––US goodwill offset against reserves(15,040)(12,117)––Undiscounted provision for deferred tax(13,858)(12,117)1,182–Discount15,04012,117––Discounted deferred tax asset1,182–1,182–Movement in deferred tax:£000’sDeferred tax asset at October 1–Deferred tax credit in the profit and loss account(note 8)1,182Deferred tax asset at September 301,182* see note deferred tax asset of £1,182,000 (2001: £nil) has been recognized in respect of depreciation in excess of UKcapital allowances and other short-term timing differences. The directors are of the opinion that based on recentand forecast trading, the level of profits in future years are more likely than not to be sufficient to enable the assetto be deferred tax asset of £7,800,000 has not been recognized in respect of overseas tax losses (2001: £5,500,000)as there is insufficient certainty in current global markets to be able to say that the group will be more likelythan not to generate sufficient suitable overseas taxable profits within the immediate group is able to obtain tax relief in the US for the cost of goodwill arising on its acquisitions of somebusinesses. In certain cases the goodwill was written off to reserves under the transitional rules set out inFRS 10 ‘Goodwill and Intangible Assets’. Utilization of the available tax relief in the US gives rise to a timingdifference as set out above. The potential timing difference will only reverse on a sale of the relevant the relevant businesses are considered core to the group there is currently no intention to sell them. Thepotential reversal is therefore so far into the future that, after discounting, the potential liability becomesinsignificant. The effect of discounting the group’s other deferred tax assets and liabilities is not Report & Accounts 2002Page 55
Notes to the Accounts continued21Called up share capital and share optionsGroup and Company20022001£000’s£000’sAuthorized share capital:112,000,000 ordinary shares of each280280Allotted and fully paid share capital:87,793,812 ordinary shares of each(2001: 87,791,812 ordinary shares of each)219219During the year, 2,000 ordinary shares of each (2001: 64,000 ordinary shares) with an aggregate nominalvalue of £5 (2001: £160) were issued for a cash consideration of £4,240 (2001: £161,000) following the exerciseof share options granted under the company’s share option optionsThe following options are outstanding at September 30 and are options to subscribe for new ordinary shares each in the company:Number of ordinary shares under optionPeriod during which option may be exercised:Option price20022001£Before December 5 2001–2, December 8 20023,0005, November 29 200335,00035, December 8 200432,00032, June 19 2005570,968570, February 8 200629,78429, February 8 2003154,216202, February 7 200746,40462, February 24 2004102,596118, January 7 200886,22886, January 7 2005197,772237, January 29 2009300,000322, February 11 2009160,000160, June 25 2009540,000540, January 5 2003 and January 4 2010226,000252, March 2 2004 and March 1 2011349,000366, January 23 2005 and January 22 2012238,000–,070,9683,021,968Page 56Annual Report & Accounts 2002
EuromoneyInstitutional Investor PLCNotes to the Accounts continued22Statement of movement on reservesShareCapitalProfit andpremiumredemptionlossaccountreserveaccountTotal£000’s£000’s£000’s£000’sGroupAt October 1 200133,7398(126,884)(93,137)Retained profit for the year––10,53610,536Reinstatement of goodwill on closed businesses512512Exchange differences arising on translation of netinvestments in overseas subsidiary undertakings––4,3324,332Net exchange difference on foreign currency loans2,4692,469Tax on foreign exchange translation differences––(740)(740)Exercise of share options4–4At September 30 200233,7438(109,775)(76,024)As permitted under the provisions of FRS 10 ‘Goodwill and Intangible Assets’, goodwill arising on consolidationpreviously written off to reserves has been set off against the profit and loss account. The cumulative amount ofgoodwill written off to reserves at September 30 2002 was £156,462,000 (2001: £156,974,000).Share CapitalProfit andpremiumredemptionCapitallossaccountreservereserveaccountTotal£000’s£000’s£000’s£000’s£000’sCompanyAt October 1 200133,73981,8426,29141,880Retained profit for the year–––9,0549,054Exercise of share options4–4At September 30 200233,74381,84215,34550,93823CommitmentsAcquisitionsThe group has contingent commitments under put options given to various parties under acquisition agreementsestimated at an aggregate £1,401,000 at September 30 2002 (2001: £2,300,000).Operating leasesAnnual commitments under operating leases for land and buildings at September 30 2002 were as follows:GroupGroupCompanyCompany2002200120022001£000’s£000’s£000’s£000’sOperating leases which expire:Within one year6191,830–9Between two and five years8733,403100409Over five years2,4633132832683,9555,546383686Annual Report & Accounts 2002Page 57
Notes to the Accounts continued24Contingent liabilities and assetsClaims in MalaysiaFour writs claiming damages for libel were issued in November 1995 in Malaysia against the company and threeof its employees in respect of an article published in one of the company’s magazines, International CommercialLitigation. The writs were served on the company on October 22 1996. The total amount claimed is280 million Malaysian ringgits (£50 million). No provision has been made in these financial statements asthe directors do not believe the company has any material liability in respect of these in England and WalesIn August 2002, the company successfully settled the £4 million claim related to the article published inInternational Commercial Litigationbrought in England against the company and three of its employees seeking100% contribution towards damages and legal costs incurred in Malaysia by sources quoted in the article. Thetotal cost to the company, including legal fees, was £85, party transactions(i)The operating lease charge includes property rental payments amounting to £107,000 (2001: £110,000) madeto the president of MIS Training, Inc. a subsidiary undertaking.(ii)The group has a loan facility from Daily Mail and General Holdings Limited and the same loan facility toAssociated Newspapers North America, Inc. During the year US$ million was repaid and the same amountdrawn down on 26 September 2002. The amount owing at September 30 2002 amounts to US$ million(£ million) which includes interest payable. Each balance is repayable within one month of demand andbears interest at US prime rate.(iii)The group expensed £272,000 (2001: £215,000) for services provided by Daily Mail and General Trust plcincluding costs associated with the bi-lateral facility and arrangement fee (note 18).(iv)On September 28 2001 the group entered into a US$ million fixed rate interest rate swap at % withDaily Mail and General Holdings Limited. The termination date is March 29 2006. During the year the grouppaid US$449,000 (£303,000) of interest to Daily Mail and General Holdings Limited in respect of this swap.(v)The group agreed on September 25 2002 to sell US$ million for sterling to the Daily Mail and GeneralTrust plc on March 27 2003 at an exchange rate of parent undertakingThe directors regard the ultimate parent undertaking as Rothermere Continuation Limited, which is incorporatedin Bermuda. The ultimate controlling party is The Viscount Rothermere. The largest and smallest group of whichthe company is a member and for which group accounts are drawn up is that of Daily Mail and General Trust plc,incorporated in Great Britain and registered in England and Wales. Copies of the report and accounts are availablefrom:The Company SecretaryDaily Mail and General Trust plcNorthcliffe House, 2 Derry StreetLondon W8 5TTPage 58Annual Report & Accounts 2002
EuromoneyInstitutional Investor PLCFive Year Record Group profit and loss extracts19981999200020012002£000’s£000’s£000’s£000’s£000’sTurnover176,930168,423192,122204,783179,734Operating profit before goodwillamortization35,21228,43332,54128,11829,064Goodwill amortization–(3,446)(5,500)(5,949)(6,125)Operating profit35,21224,98727,04122,16922,939Share of operating profit in associates585416165169413Exceptional items on disposal/closure of businesses–893179(3,250)1,533Net interest payable(3,712)(3,727)(4,782)(5,417)(4,239)Profit on ordinary activities before tax32,08522,56922,60313,67120,646Tax on profit on ordinary activities(8,342)(7,184)(7,218)(5,025)2,793Profit on ordinary activities after tax23,74315,38515,3858,64623,439Equity minority interests(1,194)(322)(1,100)(217)38Profit for the financial year22,54915,06314,2858,42923,477Dividends paid and proposed(11,899)(11,934)(12,930)(12,939)(12,941)Retained profit/(loss) for the financial year10,6503,1291,355(4,510)10,536Basic earnings per earnings per diluted earnings per share beforegoodwill amortization and exceptional weighted average number ofordinary shares (number)86,686,98086,978,06888,402,63787,702,07487,735,087Dividend per balance sheet extractsIntangible fixed assets–21,95825,79931,04924,685Tangible fixed assets9,2939,6568,1297,44210,088Net current assets/(liabilities)2,784(3,890)19,52611,76920,028Creditors: amounts falling due aftermore than one year(60,609)(73,816)(101,816)(102,742)(98,350)Provisions for liabilities and charges(4,539)(3,628)(2,512)(1,169)(127)Deferred income(30,785)(32,760)(38,123)(38,920)(31,946)Net liabilities(83,856)(82,480)(88,997)(92,571)(75,622)Annual Report & Accounts 2002Page 59
Internet Sites Euromoney Institutional InvestorInternet Sites (all www.) further information on all Investor products, call the Hotline on:(UK)+44 (0) 207 779 (US)+1 800 437 9997 +1 212 224 e-mail to:@ 60Annual Report & Accounts 2002
Euromoney Institutional Investor PLCNestor House, Playhouse Yard,London EC4V 5EX
